Peak Oil : A Look At “Peak Demand” # 6

Peak oil demand is a provocative theory and would rely on some unanswered questions being met: namely on the  development of large-scale gas-fired trucks, rail and shipping vessels; the sustainability of the US shale boom; and policy action to support improved fuel-mileage and to phase out oil subsidies. [1]

DAMNED FACTS

A Citi Research report on so-called peak oil demand [first post of this six-part series here] has been drawing a lot of attention lately. Understandably: what could be bigger news for anyone concerned with climate change, energy security, etc.? The report comes out hot right from the start, suggesting ‘The End is Nigh’ and we are ‘Approaching a Tipping Point’ on global oil demand.
Unfortunately, though, it’s less than persuasive. The first thing that ought to raise an eyebrow or two is how wildly Citi’s analysis diverges from that of established data information centers like the International Energy Agency and the US Energy Information Agency—not to mention our own Roadmap Model, or Exxon Mobil, or really anyone else at all—on the demand for oil from transportation and other global activity, based on known business-as-usual practices, vehicle ownership and activity, technology trends, and adopted policies.
One explanation for that divergence is that the Citi report relies on questionable assumptions about known changes in the transportation sector. In particular, Citi’s assumption that fuel efficiency will trend upward at 3–4% per year is highly misleading. (links in original quote; detailed explanation followed) [2]

NICE STORY; TOO BAD IT’S B.S.

The straw man argument suggesting that we peak oil proponents are spreading fears about “running out of oil” has certainly been a convenient starting point for the more calm and presumably rational, dispassionate reasonings of fossil fuel-industry soothsayers. That this argument is not true has become largely irrelevant. Peak demand, energy independence, vast massive reserves as far as the eye can see, a boom just beginning … these and variations of the same themes by more powerful and monied media and industry cheerleaders have all but drowned out the other perspective about peak oil and future energy supplies.

Taken together, the improvement in global fleet efficiency and the substitution of natural gas for oil could be enough to put in a plateau for global oil demand by the end of this decade [3]

The idea that the US heavy-duty vehicle fleet could consume 0.5 million barrels of oil equivalent per day in 2020 of natural gas stretches credulity. This would imply that about 15% of the US heavy-duty fleet energy use, meaning over 1.5 million trucks, would be natural gas. Natural gas for trucks is making major inroads, to be sure, but this level of penetration into the heavy-duty fleet would require a dramatic inroads for natural gas among more diverse, long-distance truck types. The vehicle technology, the commitment by manufacturers to bring mass-market products to market, the infrastructure, and the policy are simply not in place to make this natural gas vehicle scenario happen [4]

CONSIDER THIS

For those of us who believe that the ongoing depletion of conventional crude supplies actually matters—especially when coupled with all of the fact-based, context-rich arguments about unconventional substitutes (such as tight oil, the tar sands, deep-sea resources, and the expense, diminished energy efficiency, rapid depletion rates, etc. all associated with exploration and production)—the message remains too important to set aside. Serious advocates of peak oil’s reality never raise fears about running out of oil.

What we suggest instead is that the combination of the key facts stated above calls for more deliberate and intelligent planning to shift away from our full-blown dependence on oil to alternatives. No solution is perfect, easy, inexpensive, or guaranteed. Transitioning the near-infinite complexity of modern industrial and cultural life away from that dependence won’t happen overnight.

Completely ignoring the facts of a finite resource now on the downside of its production capabilities and the unpleasant, inconvenient facts about what we’re currently doing to replace conventional crude oil supplies is not our wisest strategy. Those alternatives tell a pleasant tale, but unless we’ve abandoned any and all notions of long-term, fact-based planning, the usefulness of that story will be short-lived, and painful. There’s little on the fact-based horizon suggesting world demand is on the verge of peaking.

From 2005 through 2010, the growth in demand from China and India was double the demand lost in the U.S., and 1.14 times the combined demand loss of the U.S. and Europe. [5]

World oil demand doesn’t appear on track to peak in analyses that are based on known technology and policy trends. If only wishing made it so. The peaking of world oil demand is indeed achievable in the 2020–2030 timeframe. The indicated 3–4%/year efficiency goals are achievable; in fact, efficiency technology could go even further if long-term policies are enacted. But getting there will require the adoption of many dozens of new efficiency and fuel policies around the world, as well as billions of dollars of investments by leading automakers, suppliers, and fuel providers. Even if conventional oil supplies will peak, far more technology and policy action will be needed to stabilize the demand for oil use in the 2020 or even 2030 timeframe. (links in original quote) [6]

As uncertain and inconvenient as renewable energy development may be, if we aren’t appreciating the limitations of fossil fuel reliance beyond next week, we’re creating nothing but more challenges and problems in the years to come. Worth considering?

~ My Photo: Celebration! Red Sox win the World Series – 10.30.13

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